Ep. 7 Case Conference: Big decisions with real money

Feb 16, 2024

Two real investor stories explore high-stakes choices about concentration, leverage, and timing. One tale follows an aggressive tech-heavy portfolio that ignored diversification and rebalancing. The other examines life after a business sale, focusing on cash allocation, risk tolerance, and systematic entry. Themes include investor psychology, asset allocation, and the practical need to rebalance during market turbulence.

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ANECDOTE

Surgeon’s Dot‑Com Bet

A plastic surgeon in 1997 believed their tech insight justified massive tech exposure in stocks and felt highly tolerant of risk.
Their concentration in practice and tech set the stage for severe losses when the dot-com bubble burst.

INSIGHT

Expertise Doesn’t Equal Market Edge

Benjamin Felix warns that expertise in science doesn't translate to skill in public markets or bringing products to market.
He recommends focusing on the practice where the surgeon has real control and specialist advantage.

ANECDOTE

From Windfall To Margin Call

The surgeon invested 90% US stocks and 10% high tech starting in Dec 1997 and then borrowed against equipment to double down on tech.
Early huge gains in 1998–1999 were followed by the dot‑com crash, forcing portfolio sales to cover income shortfalls.

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In this episode, we follow the stories of two distinct investors facing unique challenges. First, meet a plastic surgeon in the high-flying tech-driven world of 1997. With a high-risk tolerance and a flourishing practice, this surgeon believes they can conquer the market. However, as the dot-com bubble looms, they must navigate the fine line between risk and reward, teaching us vital lessons about diversification, leverage, and the challenges of the market. Next, explore the journey of a savvy business owner who sold their company at just the right time, amassing substantial cash. Cautious due to past stock market losses, this investor seeks to protect their newfound wealth. We discuss the delicate balance of risk tolerance, financial independence, and how to construct a portfolio that aligns with individual objectives. Throughout these stories, listeners will gain insights into asset allocation, the psychology of risk, and the importance of rebalancing during market turbulence. To discover principles that will help you make informed investment decisions and steer your financial future toward success, tune in today!

Key Points From This Episode:

(0:01:21) Case study one: a plastic surgeon with high-risk tolerance and a successful practice.

(0:02:12) Why they should diversify investments and avoid excessive amounts of risk.

(0:05:10) How human bias plays into decision-making in our first case study.

(0:07:31) An essential lesson from our first case: know your risk tolerance.

(0:11:28) Case study two: an entrepreneur who sold their business and has a significant amount of cash on hand.

(0:12:13) How they should structure their portfolio to safeguard their financial health.

(0:15:55) Benefits of rebalancing and why it is vital, even during a volatile market.

(0:17:59) Closing comments and key takeaways.

Links From Today's Episode:

https://moneyscope.ca/2024/02/16/ep-7-case-conference-big-decisions-with-real-money/

Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/

Benjamin on X — https://twitter.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Dr. Mark Soth (The Loonie Doctor) — https://www.looniedoctor.ca/

Dr. Mark on X — https://twitter.com/LoonieDoctor